Reinsurers 'might as well give up' - Mega Broker renewal report

Reinsurers are on the brink of becoming extinct, according to a renewal round-up outlook report from Mega Broker. Against a background of zero demand for their outdated products, colossal over-capacity boosted by third party capital willing to steal their business for negative returns, reinsurers will soon be financial services dinosaurs, Mega Broker says.

Mega Broker's head ofanalytics Dean Shardenfraud

In its report "All washed up: reinsurance husks have nothing to offer our clients", Mega Broker's head of analytics Dean Shardenfraud said that reinsurers could no longer even give away their treaty nor their fac coverage. "Cedants now consider reinsurance to be a negative value contributor to optimum business strategizing," Shardenfraud told RISKbitz. "All we hear from our clients is, please fix me up with some of that cheap as chips third or even fourth party capital."

A reinsurance buyer with a large global insurer (who wished to remain anonymous) is quoted in the report as saying that reinsurance contracts "take ages" to negotiate every year and frequently spoil their Christmas break. "If I can get a deal with a pension fund or two that have more money than sense, why should I bother talking to a whole load of tedious reinsurers begging for my business," he said.

The cedant joked that he expected to see more reinsurers heading to Zurich: "To sign up with that clinic for voluntary euthanasia!" he joked.

An absence of costly natural catastrophes is another cause for insurers' lack of interest in excess of loss reinsurance, Mega Broker said in its report. "There hasn't been a hurricane in the US or a winter storm in Europe for as long as any of us in the office can remember," Shardenfraud said. "Hurricane Catriona, or whatever, was like a century ago right? It's almost like climate change has put an end to bad weather."

Asked how reinsurance brokers can continue to remain profitable without reinsurance business to place, Shadenfraud said, "Er, we are transitioning to a largely fee-based risk analystics model combined with full investment bank style capability. I think."